Question

1. Which of the following is a characteristic of a perpetual inventory system? a. Inventory purchases are debited to a Purchases account. b. Inventory records are not kept for every item. c. Cost of goods sold is recorded with each sale. d. Cost of goods sold is determined as the amount of purchases less the change in inventory.

2. How is a significant amount of consignment inventory reported in the statement of financial position? a. The inventory is reported separately on the consignor's statement of financial position. b. The inventory is combined with other inventory on the consignor's statement of financial position. c. The inventory is reported separately on the consignee's statement of financial position. d. The inventory is combined with other inventory on the consignee's statement of financial position.

3. The acquisition cost of a certain raw material changes frequently. The book value of the inventory of this material at year end will be the same if perpetual records are kept as it would be under a periodic inventory method only if the book value is computed under the a. weighted-average method. b. moving average method. c. FIFO method. d. None of these are correct.

4. In a period of rising prices, the inventory method which tends to give the highest reported net income is a. moving-average. b. first-in, first-out. c. weighted-average. d. None of these are correct.

5. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 200 units that cost £65 each. During the month, the company made two purchases: 300 units at £68 each and 150 units at £70 each. Chess Top also sold 500 units during the month. Using the average cost method, what is the amount of ending inventory? a. £10,500. b. £33,770. c. £33,400. d. £10,131.

6. Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 200 units that cost £65 each. During the month, the company made two purchases: 300 units at £68 each and 150 units at £70 each. Chess Top also sold 500 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month? a. £33,770. b. £32,500. c. £34,150. d. £33,400.

Use the following information for questions 7 and 8. The following information was available from the inventory records of Rich Company for January: Units Unit Cost Total Cost Balance at January 1 3,000 €9.77 €29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January 7 (2,500) January 31 (4,000) Balance at January 31 1,200

7. Assuming that Rich does not maintain perpetual inventory records, what should be the inventory at January 31, using the weighted-average inventory method, rounded to the nearest dollar? a. €12,606. b. €12,284. c. €12,312. d. €12,432.

8. Assuming that Rich maintains perpetual inventory records, what should be the inventory at January 31, using the moving-average inventory method, rounded to the nearest dollar? a. €12,606. b. €12,284. c. €12,312. d. €12,432.

Answer 1

1. Option c .Cost of goods sold is recorded with each sale

Reason: In perpetual inventory system, each sale and purchase is recorded as and when they occur.

2. Option a. The inventory is reported separately on the consignor's statement of financial position.

3. c. FIFO method.

4. b. first-in, first-out

5. d. 10131

Beginning inventory	200.00	65	13000
Purchases	300	68	20400
	150	70	10500
Total	650.00		43900
Average price [43900/650]	67.53846154
Closing inventory [150*67.5384]	10131

6. Option d. 33400

Beginning inventory	200.00	65	13000
Purchases	300	68	20400
	150	70	10500
Total	650.00		43900
COGS
Beginning inventory	200.00	65	13000
Purchases	300	68	20400
			33400

7 & 8 the question is distorted. Please post in proper format.